The present invention relates, in general, to employee benefits and, more particularly, to determining the value of the employee benefits.
Benefits offered by employers are typically earned over time and commonly determined based on the employee's tenure with an employer. Employee benefits may include a combination of annual leave, sick leave, holidays, vacation, military leave and compensation time, to name a few. These employee benefits are frequently provided in the form of paid-time-off. Further, the employee benefits can include spending accounts such as health spending accounts and other designated spending accounts.
Employers typically have a combination of policies and contracts in place to establish the benefits offered to their employees. Many of these policies and contracts include limitations such as the portion of benefits that can carry over to the next calendar year. Further, employee benefits of exempt and non-exempt employees can vary based on union contract negotiations and other reasons. Federal statutes, such as 29 U.S.C. §§201-219, govern certain labor practices of employers and is referred to as “The Fair Labor Standards Act” (FLSA). Generally, the FLSA does not establish benefits. Instead, the FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting Federal, State, and local government and the private sector employees. In contrast, the “Federal Family and Medical Leave Act” (FMLA) requires employers to allow employees time off as outlined in the Code of Federal Regulations, i.e., 29 CFR §825.207). However, the time off or leave provided by FMLA is generally not paid. Since the statutes normally do not include employee benefits, employers are generally given broad latitude in providing benefits to their employees.
FIG. 1 is a table that illustrates employee transactions of a commonly used technique based on hours for providing employee benefits. Column A of FIG. 1 identifies the transactions or actions. Column B of FIG. 1 identifies a time period for each transaction in chronological order from the top to the bottom of the table. As illustrated in column D of FIG. 1, the employee earns a benefit of two hours over each of the time periods 1, 2 and 3. In column G, a balance of 6 hours is shown for the time period 6 labeled 4. In period 5, the employee uses two hours and the resulting account balance as shown at the bottom of column G is 4 hours. Even though period 5 indicates a new wage rate of $15 per hour, the employee's wage rate is not a consideration in determining the remaining account balance of 4 hours. Instead, the account balance remains in hours.
FIG. 1A, in contrast to FIG. 1, illustrates a monetary valuation of the employee benefits. Instead of hours as previously depicted in FIG. 1, FIG. 1A uses monetary value (e.g., dollars). The time periods and actions illustrated in FIG. 1A are identical to those shown in FIG. 1. Based on the salary rate of $15 per hour, from column C of FIG. 1, the period 4 balance (i.e., 6 hours under column G) as shown in column K of FIG. 1A is $90. In period 5, the employee uses 2 hours valued at $15 per hour as illustrated in column E. Hence, $30 is the value of 2 hours used by the employee. The balance at the bottom of FIG. 1A is $60. The employee uses two hours valued at $30 of their earned benefit as shown in period 5. After using the $30 or two hours of employee benefit at the wage rate of $15 per hour, the value of the balance is $60. This balance does not accurately represent the value of the employee benefits, because all the hours are valued at the wage rate of the most recent work period. The wage rate of each pay period over time is not applied to the benefits earned for the pay periods.
Hence, there is a need to improve the method of establishing value to employee benefits.